Home country uncertainty and the international-performance relationship: Building an uncertainity management capability

Document Type

Article

Publication Date

12-1-2017

Publication Title

Journal of World Business

First Page

209

Last Page

221

DOI

10.1016/j.jwb.2017.11.002

Abstract

We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru.

Notes

Version of record can be found through Elsevier.

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